a commercial document that is used to control the purchasing of products and services from external suppliers
A Purchase Order (PO) is a formal document issued by a buyer to a supplier, authorising the purchase of specific goods or services. It outlines details such as product descriptions, quantities, agreed prices, and delivery terms.
Why POs Matter
In ecommerce and merchandising, purchase orders are essential for financial control, supplier relationships, and inventory planning. They provide legal protection, ensure clarity between buyer and seller, and serve as the foundation for accurate fulfilment and accounting.
How POs Work
The process typically involves:
Creation: Buyer generates a PO with product details, quantities and terms.
Approval: Internal teams validate the order against budgets and needs.
Issuance: PO is sent to the supplier as a binding request.
Fulfilment: Supplier delivers goods or services according to the PO.
Reconciliation: Finance teams match invoices against POs to ensure accuracy.
Common Use Cases
- Merchandising teams secure stock for upcoming campaigns.
- Finance teams use POs to track spending and manage budgets.
- Logistics teams rely on POs to plan inbound shipments.
- Suppliers use POs as a contractual guarantee of payment.
Related Terms
Invoice
Procurement
Supplier Relationship Management
Inventory Management
Contract
